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Thursday, May 26, 2022

Leisure Returns, Uncertainty on Business Travel

 The hospitality industry is bracing to accommodate pent-up demand for hotel and travel in the Valley region now that business restrictions have largely subsided. The industry’s rapid recovery shows occupancy rates bouncing back to pre-pandemic levels as more vacationers plan longer trips, despite a continued lack of business travel.“Our demand really took off in the second quarter of this year, though the first quarter of this year was dismal. Obviously, we were still restricted on what we could do and in our travel, but the second quarter just really took off and the month of June, we saw just an incredible increase — a lot of last minute bookings,” said Randy Romero, general manager of the Hilton Universal in Universal City. “The level of interest in coming back to the hotels and traveling far, far exceeded what my expectations were. And that trend is continuing as the weeks and months are continuing, so it’s exciting.”The Hilton Universal now has an occupancy rate similar to pre-pandemic levels, Romero said, with 70 percent of rooms occupied at the end of the second quarter. At the height of the pandemic’s impacts, occupancy fell to 20 percent for the hotel, which relies largely on traffic from the Universal Studios Hollywood theme park.“There is a fair amount of pent-up demand, as you would imagine,” Pete Hillan, a spokesman for the California Hotel and Lodging Association, said. “But the demand is largely from the leisure traveler. There are really three segments to hoteling: leisure travel, business travel and conventions. And it’s going to be a while – most of our forecasts are late 2023, early 2024 – before we’ll see the rebirth of business and conventions. So we have a ways to go.” The surge in leisure travel is not limited to the Valley region. Allianz Partners USA’s annual Vacation Confidence Index estimates U.S. total spending will likely cross the $150 billion mark for the first time in the index’s decade-long history, a 160 percent increase over the locked-down summer of 2020 and an increase of 50 percent over a robust 2019. And the acceleration is happening quickly; compared to the first week of January, online hotel searches are up 65 percent, searches for attractions and tours increased by 78 percent, and restaurant searches are up 53 percent, according to research by TripAdvisor.Staff shortageAs T.M. Mian, owner of the Mian Co. and several area hotels, has seen his businesses rebound quickly, he is preparing to gradually raise his nightly rate if occupancy stays steady. His Hilton Garden Inn locations in Calabasas and Oxnard and his Homewood Suites in Oxnard have occupancy rates ranging from 75 to 95 percent, but rates for rooms are still nearly 15 percent lower than they were prior to the pandemic. Mian anticipates it will be another six months or so before pricing reaches rates from 2019.

With the increased number of travelers, multiple hoteliers in the area face a challenge with staffing. Despite average hourly earnings for workers in leisure and hospitality rising to $18.09 in May – the highest amount ever and up 5 percent since January, according to Labor Department data – hiring remains low.  “As the demand came back, we haven’t been able to staff up across the board the way we would like,” Hillan said, a sentiment echoed by both Romero and Mian. “So we’ve got jobs. If you know of anybody that is looking for jobs, send them to our hotels.”Romero and Mian each indicated their hotels were seeking to grow the staff between 5 and 10 percent at least.

While low staffing levels may prevent some hotels in the area from operating at full capacity, Hillan said, neither Romero or Mian indicated that fewer staff have impacted room occupancy rates. Instead, both are concentrating on filling the available roles and looking ahead to business and conference travel to return.

“I do expect and hope for a vigorous return of our business travel, and of course, the group and in-company meetings to follow as well,” Romero said. “I’m very optimistic on the way the future looks. Now, the timing of it, I’m not sure. Is it going to be as rapid as leisure travel came back? Well, I sure hope so. But we’ll get a sense of that, I think, in the upcoming two to three months.”

Katherine Tangalakis-Lippert
Katherine Tangalakis-Lippert
Katherine Tangalakis-Lippert is a Los Angeles-based reporter covering retail, hospitality and philanthropy for the San Fernando Valley Business Journal. In addition to her current beat, she is particularly interested in criminal justice topics, health and science stories and investigative journalism. She received her AA in Humanities from Moorpark College in 2016, her BA in Communication from Cal Lutheran University in 2019 and followed it up with a MA in Specialized Journalism from USC in the summer of 2020. Through her work, Katherine aspires to help strengthen the fragile trust between members of the media and the public.

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